Tucker Marshall, Chief Financial Officer and Executive Vice President, Frozen Handheld and Spreads and Sweet Baked Snacks, will then provide a detailed analysis of the financial results in our fiscal year 2027 outlook. During the fourth quarter, the company completed its annual evaluation of operating segments and, as a result, the away from home business met the criteria to be presented as a reportable segment. The company has updated its presentation of segment results accordingly, and prior year amounts have been modified to reflect this change. Eastern Time today for a live question and answer session with management to further discuss our fourth quarter results and next year's outlook for fiscal year 2027.
We are pleased with our fiscal year 2026 results, as we have exceeded the midpoint of our original guidance for the year while effectively navigating a dynamic external environment. This is our seventh consecutive year of comparable top-line growth when excluding contract manufacturing sales related to divested pet food brands. We exceeded our free cash flow expectations, generating $1.2 billion, which enabled us to pay down more debt than originally anticipated. We will continue to prioritize disciplined capital deployment, and as we reduce debt, we will evaluate opportunities for share repurchases.
We are carrying meaningful momentum into fiscal year 2027 with strategic priorities that position the company to deliver strong near-term results while driving long-term growth. Total company net sales increased 6%, driven by growth in the coffee, away from home, pet foods, and frozen handheld and spread segments. We also delivered segment profit growth across all of our reportable segments, reflecting disciplined execution and cost management. As a result of our net sales and profit growth, adjusted earnings per share increased 20% versus the prior year.
| Metric | Period | Current guidance |
|---|---|---|
| Net sales | FY2027 | Decrease 3%-4% vs prior year, driven by lower net price expectations and lower volume mix (decrease) |
| Debt paydown | FY2027 | Approximately $500 million planned (lower) |
| Leverage ratio (net debt / adjusted EBITDA) | End of FY2027 | Around 3x (improving) |
| Dividend payout policy | FY2027 | Return approximately 40%-45% of annual adjusted EPS to shareholders (maintained) |
| Metric | YoY | Note |
|---|---|---|
| U.S. Retail Coffee net sales | +12% | Net price realization added 21 points from higher pricing across the portfolio; volume mix subtracted 8 points from Dunkin' and Folgers declines, partly offset by Cafe Bustelo growth. |
| U.S. Retail Coffee segment profit | +1% | Higher net price realization and lower marketing spend, mostly offset by higher commodity costs and tariffs and unfavorable volume mix. |
| U.S. Retail Frozen, Handheld, and Spreads net sales | +1% | Net price realization added 2 points (Uncrustables pricing, lower Jif trade spend); volume mix subtracted 2 points from Jif and Smucker's fruit spreads declines, partly offset by Uncrustables growth. |
| U.S. Retail Frozen, Handheld, and Spreads segment profit | +37% | Lower marketing spend, higher net price realization, lapping prior-year equipment write-off charges, lower costs, and lower pre-production expenses for the new Uncrustables facility, partly offset by unfavorable volume mix. |
| U.S. Retail Pet Foods net sales | +2% | Net price realization added 3 points; volume mix subtracted 2 points from dog snacks decline and lapping divested-brand contract manufacturing, partly offset by cat food growth. |
| U.S. Retail Pet Food segment profit | +18% | Higher net price realization and lower marketing spend. |
| Sweet Baked Snacks net sales | -5% | Volume mix down 12 points from snack cakes and breakfast declines, partly offset by donut growth; net price realization added 8 points. |
| Sweet Baked Snacks segment profit | +45% | Higher net price realization and lower marketing spend, partly offset by unfavorable volume mix and higher costs. |
| Away From Home net sales | +15% | Net price realization added 8 points from higher coffee pricing; volume mix added 6 points from Uncrustables, fruit spreads, and coffee. |
| Away From Home segment profit | +21% | Higher net price realization and favorable volume mix, partly offset by higher costs. |
| Adjusted operating income | +14% | Increased gross profit and favorable SG&A from lower marketing and distribution costs, partly offset by higher general and administrative expenses. |
| Fourth quarter free cash flow | +$185M ($484M vs $299M) | Increase in cash provided by operating activities. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Coffee pricing and green coffee commodity costs | Price increases implemented in May and August 2025 | Green coffee commodity moderating with positive early crop indications; company starting to lower prices through trade investments and planning a list price decrease in a sustained deflationary environment | Rising |
| Uncrustables as a growth platform | — | Accelerated to 8% growth, strongest quarterly rate this fiscal year; new manufacturing facility ramping with lower pre-production expenses | Rising |
| Sweet Baked Snacks stabilization | — | Faster-than-anticipated return to production after the February Emporia, Kansas fire; improving profitability; Hostess Donettes growth strong | Rising |
| Pet foods turnaround | — | Cat food momentum (Meow Mix +8%, dry cat share gains) with dog snacks (Milk-Bone, Pup-Peroni) a key focus area undergoing stabilization actions | Steady |
| Disciplined capital deployment and deleveraging | $720M debt paid in FY2026; leverage 3.8x | Plan to pay down ~$500M in FY2027 toward ~3x leverage, with share repurchases to be evaluated as debt reduces | Steady |
| Tariffs | — | Approximately $23 million realized in Q4, primarily impacting U.S. Retail Coffee; FY2027 guidance assumes no new tariff impacts or refunds | Rising |